Montana Real Estate Bill of Sale by lns12231

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									61st Legislature                                                                                              HB0647.01


 1                                                  HOUSE BILL NO. 647

 2                                            INTRODUCED BY D. BARRETT

 3

 4   A BILL FOR AN ACT ENTITLED: "AN ACT CREATING THE MONTANA REAL ESTATE BACKUP

 5   WITHHOLDING ACT; REQUIRING WITHHOLDING FOR INCOME TAX PURPOSES ON THE GAIN FROM THE

 6   SALE OR EXCHANGE OF CERTAIN MONTANA REAL ESTATE; ESTABLISHING A WITHHOLDING TAX

 7   RATE; PROVIDING EXCEPTIONS TO WITHHOLDING; ESTABLISHING REPORTING AND REMITTANCE

 8   REQUIREMENTS; REQUIRING THAT CERTAIN INFORMATION BE SUBMITTED WITH THE REALTY

 9   TRANSFER CERTIFICATE; PROHIBITING THE RECORDING OF A TRANSFER OF MONTANA REAL ESTATE

10   OR A CHANGE IN OWNERSHIP RECORDS OF MONTANA REAL ESTATE FOR PROPERTY TAX PURPOSES

11   IF THE REQUIRED INFORMATION IS NOT PROVIDED; PROVIDING RULEMAKING AUTHORITY TO THE

12   DEPARTMENT OF REVENUE; CLARIFYING THE LIABILITY OF CLERKS AND RECORDERS; AMENDING

13   SECTION 7-4-2623, MCA; AND PROVIDING AN APPLICABILITY DATE."

14

15   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:

16

17             NEW SECTION. Section 1. Short title. [Sections 1 through 6] may be cited as the "Montana Real

18   Estate Backup Withholding Act".

19

20             NEW SECTION. Section 2. Definitions. As used in [sections 1 through 6], the following definitions

21   apply:

22             (1) "Certified calculated gain" means the gain the transferor certifies in writing to the department, under

23   penalty of false swearing as provided in 45-7-202, that the transferor will realize on a disposition of Montana real

24   estate.

25             (2) "Improvements" has the meaning provided in 15-1-101.

26             (3) "Montana real estate" means real estate or improvements located in Montana.

27             (4) "Principal residence" means a principal residence within the meaning of 26 U.S.C. 121.

28             (5) "Real estate" has the meaning provided in 15-1-101.

29             (6) "Sales price" means the total consideration for the transfer of Montana real estate, including the

30   market value of any property transferred to the transferor, and any liability assumed or taken subject to the sales


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61st Legislature                                                                                              HB0647.01


 1   price.

 2            (7) "Transferor" means any person or entity disposing of Montana real estate.

 3

 4            NEW SECTION. Section 3. Withholding required on sale or exchange of Montana real estate --

 5   rate. Except as provided in [section 4], there must be withheld from the proceeds from a sale or exchange of

 6   Montana real estate an amount equal to the lesser of:

 7            (1) 2.5% of the sales price of the Montana real estate conveyed; or

 8            (2) the amount of the transferor's certified calculated gain multiplied by the highest rate of tax provided

 9   for in 15-30-103.

10

11            NEW SECTION. Section 4. Withholding -- application not required. Withholding is not required on

12   the transfer of Montana real estate under the provisions of [section 3] if:

13            (1) the sales price of the Montana real estate conveyed is less than $100,000;

14            (2) the transfer occurs:

15            (a) pursuant to a power of sale under a mortgage or deed of trust;

16            (b) as the result of a decree of foreclosure; or

17            (c) by deed in lieu of foreclosure; or

18            (3) the transferor establishes that:

19            (a) the transferor is an individual who is a Montana resident;

20            (b) the Montana real estate being transferred is the principal residence of the transferor or was the

21   principal residence of a decedent;

22            (c) the last use of the property being transferred was by the transferor as the transferor's principal

23   residence;

24            (d) the Montana real estate has been compulsorily or involuntarily converted within the meaning of 26

25   U.S.C. 1033 and the transferor intends to acquire property similar or related in service or use so that the gain is

26   not recognized under the provisions of 26 U.S.C. 1033;

27            (e) the Montana real estate is being relinquished in an exchange in which gain and loss is not recognized

28   pursuant to 26 U.S.C. 1031; or

29            (f) the transferor is a corporation, a pass-through entity, or a disregarded entity incorporated or organized

30   under the laws of the state of Montana.


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61st Legislature                                                                                             HB0647.01


 1

 2           NEW SECTION. Section 5. Reporting and remittance. (1) The transferor shall report to the

 3   department under oath, on a form prescribed by the department, all information necessary to compute the amount

 4   withheld pursuant to [section 3] or to establish that the transferor is not required to withhold pursuant to [section

 5   4].

 6           (2) Within 5 business days of closing on the sale or exchange of Montana real estate, the transferor shall

 7   file the report and remit the amount withheld, if any, to the department.

 8           (3) A copy of the report and a copy of the payment, if any, for withholding must be attached to the realty

 9   transfer certificate required by 15-7-305. The county clerk and recorder may not record any deed or other

10   instrument transferring title to Montana real estate if the copies required by this section are not provided.

11           (4) The department may not change any ownership records used for the assessment or taxation of

12   Montana real estate unless the copies required by subsection (3) are attached to the realty transfer certificate.

13           (5) Any amount required to be paid pursuant to [section 3] and remitted to the department pursuant to

14   this section is considered a payment on the account of the transferor for the purposes of individual income tax

15   under Title 15, chapter 30, or for the purposes of the corporation license tax or corporation income tax under Title

16   15, chapter 31. If the transferor is a pass-through entity, the payment is considered a payment on the account

17   of the pass-through entity's shareholders, partners, or members, as applicable.

18

19           NEW SECTION. Section 6. Rulemaking. The department shall adopt rules to implement and

20   administer [sections 1 through 6].

21

22           Section 7. Section 7-4-2623, MCA, is amended to read:

23           "7-4-2623. Liability of clerk relating to duties as recorder. A county clerk is liable to the party

24   aggrieved for three times the amount of the damages that may result and is punishable as provided in this code

25   if the county clerk to whom an instrument is delivered for record:

26           (1) neglects or refuses to record the instrument within reasonable time after receipt except when the

27   information required by law to record the instrument is not provided;

28           (2) falsely records an instrument or records an instrument in any other manner than as directed in this

29   part;

30           (3) neglects or refuses to keep in the clerk's office indexes that are required by this part or to make the


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61st Legislature                                                                                          HB0647.01


 1   proper entries in the indexes; or

 2           (4) alters, changes, or obliterates any records deposited in the clerk's office or inserts any new matter

 3   in the records."

 4

 5           NEW SECTION. Section 8. Codification instruction. [Sections 1 through 6] are intended to be codified

 6   as an integral part of Title 15, chapter 30, part 2, and the provisions of Title 15, chapter 30, part 2, apply to

 7   [sections 1 through 6].

 8

 9           NEW SECTION. Section 9. Applicability. [This act] applies to transfers of Montana real estate

10   occurring after September 30, 2009.

11                                                       - END -




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